MacroScope

Another kind of death panels

September 23, 2009

U.S. Representative Barney Frank has never been shy about expressing his opinions. His opening remarks at a hearing he chaired with Treasury Secretary Timothy Geithner on Wednesday was no exception. Frank poked fun at a political squabble over healthcare reform as he detailed his position on what to do about non-bank financial firms considered “too big to fail.”

    “There will be death panels enacted by this Congress, but they will be for non-bank financial institutions that will not be considered too big to die.
    I say that because we have this euphemism that we are going to be ‘resolving’ these institutions. It has not been my experience that when someone says they are going to resolve something, they kill it. We are talking about dissolution, not resolution. We are talking about making it unpleasant for the entities. This is not a fate people will want.”

Comments
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Last fall as I listened to politicians line up to support bailouts, I heard the term “too big to fail” many times. At the time, I thought to myself that the answer to the problem was apparent in it’s definition. Regulation can be circumvented by lawyers and their clients as quickly as regulation is conceived. The method of defense against TBTF is simply to control the size of these institutions. Granted the creation of obscenely wealthy CEOs will diminish but, in our alleged democracy that bothers only the very few and ought have little problem gaining acceptance

Posted by Unemployed | Report as abusive
 

This clown has no idea what he’s talking about and I can’t understand why in the world he continues to be reelected. Sickening.

Posted by Frank | Report as abusive
 

Just would like to second the comments of unemployed. The answer really is obvious. We have regulations currently to prevent monopolies (supposedly). I see no reason that a regulation could not be put into effect to limit the size of any corporation.

An additional note or two on obscenely compensated CEO’s.
All of us unemployed working men and women can take little comfort in the knowledge that the annual salary of one CEO in America (without bonuses) would have been enough to pay 60,000 of us for the same time frame. The talking heads on television say this is necessary to hire the best qualified people. The largest bank in the world is not a U.S. Corporation, it is in China. The CEO of that institution makes $256,000 a year. I’ll be a believer in the free enterprise system solves all problems, when these jobs are listed in the paper on a bid basis to go to the lowest qualified bidder.

Posted by Will | Report as abusive
 

Hey Barney,

Why don’t you keep your “great ideas” for the next crisis? But next time do something about it BEFORE it happens, not AFTER. Where were you, obama, clinton, pelosi and the others in 2005?

Posted by vasile_sf | Report as abusive
 

The astonishing thing is that the repeal of Glass-Steagal in the US and the deregulation globally is what paved the way for any tom dick or harry to start playing with complex derivatives they did not have any understanding of. The regulations that came about after the Great Depression were designed to prevent the To Big To Fail mega financial institutions from coming into existance in the first place. It meant that the risk was contained within controlled functions – banks that leant you money to buy your home were not the same banks that played in the markets, neither did they control your pension or sell you insurance!
I dont live in the States so cant vote for Barney Franks but should he ever run for office over here he can count on at me at least!!

Posted by Doug Brinklow | Report as abusive
 

They are not the best and the brightest, but they are way over-payed. Simple example, Robert Nardelli, destroyed Home Depot and somehow that qualified him to go and destroy Chrysler. A complete failure that somehow became insanely wealthy along the way?
These corporate executives, wall st. traders, or other-payed employees of public companies are far from the ‘best and the brightest’. They just know the right people, and these people hire their friends, it’s that simple. I say this from personal experience, as someone more than qualified (multiple degrees, professional certifications, and a lot of knowledge about financial products and markets), but unable to even get an interview. No acrimony on my part as there are many just like me. Just saying it’s who you know, not what you know. That’s makes the ‘best and the brightest’ argument irrelevant propaganda, and very far from the truth.

Posted by Mike | Report as abusive
 

This personally-disgusting knucklehead has been a leader for 20+ years over the same Congress that he is condemning for the bank dissolutions. Anything for a story, right Barney??

Posted by Gene Corder | Report as abusive
 

Will – Your data is inaccurate. The world’s largest bank, according to euromoney.com is Bank of America. Whatever Chinese bank you are referring to in regard to executive pay, you are making an apples to oranges comparison. Things are phenomenally cheaper in China. A teacher typically has at least a couple servants. Everything, from food to bootlegged movies & software, costs a small fraction of their cost in the US. A banker with an income of a quarter million there is a very rich man.

Posted by Geosota | Report as abusive
 

You want to see limits on executive pay? Pass legislation to ensure that -
Annualized salary and bonuses paid to an employee, operating officer or director of a public corporation which exceed X dollars/percentage of gross income will be subject to a shareholders’ vote and that stock held by or for the firm’s employees, directors and operating officers will be not be votable on matters of executive compensation.

Posted by Bob Walton | Report as abusive
 

Frank, let’s try to figure out what Barney Frank is saying. We’re missing the context for what he means in the excerpt quoted, but it seems to me he’s taking the side of the investment banks! “In its wisdom,” he says with a laugh, “Congress is about to kill off the possibility of non-bank financial institutions.” I’m not sure I think Congress is the brightest light in the box, but here’s a suggestion: Barney Frank keeps getting elected because he’s smarter than you and I are.

Posted by Henri | Report as abusive
 

To Mr. Barney Fwank,

You collectivists are responsible for the deaths of millions of innocents over the past 100 years. You can try and put a happy face with your appeals to “what is best for everyone”, but you’re still a thug.

Posted by Greg Barton | Report as abusive
 

The size of the company should not matter. It has become quite apparent that the boardroom these CEO’s live in is quite different than the world the rest of us live and hopefully work in.
Simply put if a company has payrolls above a certain level they should be taxed using the following formula.

Tax= % difference between the lowest paid employee of the company and the CEO. This would be an increase over their current tax rate.

So if a CEO ,makes a $1,000,000 salary and the janitor in the company makes $25,000 then the CEO’s pay would have an additional 25% tax above his / her already existing tax rate.

Posted by Tom | Report as abusive
 

Geosota:

I know a Chinese woman who was the Chinese national champion parachutist. She tells of servants placed in her service by the govt there to allow her to jump every day all day. The enormous differential in paychecks from there to here is the very dynamic which attracts greedy businessmen and their political enablers. In the eyes of these folks, the American worker has little or no value but undermines their profits and success.

Personally, I try very hard to avoid buying anything made in China or that part of Asis in general. I don’t want to see any of my money end up in the pockets of people who use our markets but won’t give anyone a job with a reasonable wage.

In America , if someone wants to buy a home, food, a car, insurances, clothing, furniture, utilities, vitamins, protection from identity theft, pay taxes and all the other things that our own government says we should have,,,we’d need $100000 a year. Yeah,, those $20000 a year guys are real backbreakers.

Posted by Unemployed | Report as abusive
 

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